The South Korea Financial Services Commission has said it will not lift the ban on domestic initial coin offerings (ICOs). The South Korean government said in October last year that it would make a decision in November on whether it would allow initial coin offerings again in the country. After discovering that some projects have been violating rules by making use of foreign jurisdictions and still raising funds from South Korean nationals, a decision has been reached.
South Korea Will Keep 2017 ICO Ban After Survey Results
The resolution was decided after the Financial Services Commission collated the results of a survey conducted by the Financial Supervisory Service (FSS). Hong Nam-ki, head of the office for government policy coordination, said in October that regulators in the country have been reviewing the topic in recent months and that the survey would guide decision-making.
The survey, sent to 22 companies, with only 13 responding, found that firms had been setting up paper companies in Singapore to circumvent the ICO ban, yet still raised money from Koreans, evidenced by Korean language white papers and marketing materials. Some ICO projects did not disclose important information for investors such as company profile and financial statements, and in some cases provided completely false information. The risk for investors was also deemed high because the value of the projects’ tokens had fallen by an average of 67.7 percent since launch.
In 2017, the financial regulator prohibited domestic companies and startups from participating in ICOs, citing a lack of stability and ease of manipulation as good cause to stop citizens from buying cryptocurrency tokens.
“The government has taken a cautious stance on the institutionalization of ICOs. We will stick to it”, the press release stated.
The survey also revealed that Singapore and Switzerland were the most popular places to host an ICO.